9th October 2026
Britain's gambling industry is facing a major change in taxation. Online casino games are already subject to a much higher tax rate, online betting is due to become more expensive for operators from next April, and betting shops, casinos and bingo halls are watching nervously for a possible increase in the tax on physical gambling machines.
The changes raise a wider question for the Government. Can it collect more money from gambling companies while protecting jobs, high-street businesses and customers who may be vulnerable to gambling-related harm?
The answer will depend partly on the tax rates themselves, but also on how operators respond. They could accept lower profits, reduce investment, change their offers to customers or close outlets that are no longer financially viable.[/b]
Online casino tax has already risen sharply
The first major change is already in force. From 1 April 2026, Remote Gaming Duty increased from 21% to 40%.
This tax applies to online gaming, including internet slot games and casino-style games. It is charged on the operator's relevant gambling profits, broadly the stakes received less winnings paid out, rather than being a 40% charge on every pound a customer stakes.
The distinction matters. If a customer stakes £100 and receives £90 back in winnings, the operator's gross gambling yield is £10 before other costs. The tax is not calculated as 40% of the original £100 stake. The actual duty calculation follows the statutory rules and the operator's accounting period.
The increase is intended to raise revenue for the Treasury and make the tax treatment of different forms of gambling more consistent. But it also puts pressure on operators whose businesses depend heavily on online slots and casino games.
Companies may respond in several ways. They could accept a lower profit margin, spend less on advertising, reduce promotional offers or look for savings elsewhere. Some may try to pass part of the cost on indirectly through less generous offers or changes to the games and services they provide.
It is not possible to assume that the whole tax increase will be passed on to customers, or that every operator will react in the same way.
[b]Online betting faces another increase in April 2027
A second change is scheduled for 1 April 2027. The rate of General Betting Duty on most remote betting is due to rise from 15% to 25%.
This covers many bets placed online with bookmakers, including sports betting. It is separate from the 40% Remote Gaming Duty applying to online casino gaming.
There are important exceptions. Remote bets on UK horse racing are excluded from the new 25% rate and remain at 15%, reflecting the separate Horserace Betting Levy paid by operators. Bets placed through self-service betting terminals inside licensed betting shops are also excluded from the new remote rate. Other existing betting-duty arrangements remain in place.
The distinction between online casino games and online betting is therefore important. They are not all taxed at the same rate, and the changes do not mean that every online gambling transaction will attract 40% tax.
For bookmakers operating both online and through shops, the effect could be complicated. They will need to consider the different tax treatment of online bets, shop bets and gaming machines when deciding where to invest and how to run their businesses.
Why are betting shops and bingo halls worried about slot machines?
The next issue is less certain. Ahead of the UK Budget scheduled for 28 October 2026, reports have suggested that the Government is considering raising Machine Games Duty on certain physical gambling machines.
The standard rate for many machines is currently 20% of net takings. A separate 5% rate applies to qualifying low-stake, low-prize machines, while a 25% rate applies to machines where the maximum cost to play can exceed £5.
The proposal attracting attention would increase the standard 20% rate to 40%. As at 9 October, that increase has not been confirmed by the Government. The final Budget announcement and any accompanying legislation will determine whether it happens, which machines are affected and when a new rate would begin.
Machine Games Duty applies to relevant machines in places such as betting shops, adult gaming centres, casinos and bingo clubs. These businesses can have several sources of income, and machines may be an important part of the business even where the main attraction is something else.
A doubling of the standard rate would leave less of the machines' net takings available to cover wages, rent, electricity, maintenance and other expenses. Some operators might absorb the extra cost, but others could remove machines, reduce staffing, delay investment or close branches that are already struggling.
Industry representatives have warned that jobs and venues could be at risk. Such warnings deserve attention, but they are not proof that closures will inevitably follow. The impact would vary from one operator to another, depending on its finances and reliance on machine income.
Bingo Duty was abolished. Could another tax rise undo some of the benefit?
There is an apparent contradiction in the Government's approach.
From 1 April 2026, Bingo Duty was abolished. The previous duty had been charged at 10% on the relevant profits from bingo. The change was intended to support traditional bingo businesses, which can provide jobs and social venues as well as gambling facilities.
But bingo halls may also operate gaming machines. Removing Bingo Duty does not exempt those machines from Machine Games Duty.
If the Government now raises the machine duty, bingo operators could receive a tax reduction on one part of their business while facing a higher bill on another. The overall effect would depend on how much income comes from traditional bingo compared with gaming machines.
That is why bingo operators are concerned about the possible Budget change. The industry will want the Government to consider the combined effect of its decisions rather than looking at each tax in isolation.
There is a broader question about the future of local venues. If higher machine taxes cause some clubs to close, the effect could reach beyond the businesses themselves, affecting staff, suppliers and customers who use the venues as places to meet. Equally, the Government must consider the social costs of gambling and whether taxation can help reduce harmful activity.
Can gambling companies escape UK tax by putting their websites abroad?
One question raised by online gambling is whether a company can avoid British tax by running its website from another country.
The short answer is that moving a website or company overseas does not, by itself, remove UK gambling-tax obligations.
HM Revenue and Customs says that remote gambling operators must pay the relevant UK duties on gambling supplied to people who usually live in the UK, regardless of where the operator is based. The rules cover remote gaming and betting, although the applicable duty depends on the type of gambling.
A company based overseas can legally serve British customers if it holds the appropriate British gambling licence and meets the relevant legal requirements. A licence from another country alone is not enough to authorise it to offer gambling to customers in Great Britain.
The difficulty is enforcement against websites that operate illegally from overseas. They may try to attract British customers without a UK licence, making it harder for regulators to intervene. Customers using such sites may also have fewer safeguards if there is a dispute over winnings, their money or the fairness of a game.
This is different from a legitimate overseas operator paying the UK duties it owes. The location of a company's servers is not a simple escape route from tax, although cross-border enforcement can be more difficult in practice.
There is also a risk that higher taxes on licensed operators could encourage some customers to look for cheaper or more generous offers elsewhere. That is a possibility, not an inevitable result. Strong licensing enforcement and action against illegal sites will therefore remain important if the Government wants the tax changes to work as intended.
Will the Treasury actually collect more money?
Higher rates do not automatically guarantee a proportionate increase in revenue.
The Treasury will collect more if the higher tax rate raises more money than is lost through changes in gambling activity, business decisions and customer behaviour. If operators reduce investment, close venues or lose customers, the final yield may be lower than a simple calculation based on the old level of activity would suggest.
The Government's stated aim is to raise additional revenue from gambling duties. But the outcome will depend on how the market responds over the coming months and years.
There is also a balance to be struck between raising money, protecting jobs and reducing gambling harm. A tax system that treats different types of gambling differently may encourage changes in behaviour, but the consequences need to be monitored rather than assumed.
What to watch in the October Budget
The immediate question is whether the Government confirms an increase in Machine Games Duty, and if so, whether it applies to all machines currently paying the standard rate or only particular categories.
The details matter. A headline rate of 40% could sound straightforward, but the practical effect depends on the machines covered, the start date and the rules for calculating taxable takings.
For Scotland, including Caithness and the wider Highlands, the issue is not just about gambling companies and Treasury receipts. Betting shops and bingo halls are part of the local high street and can provide employment and social contact. Any closures would need to be weighed against the Government's aims of raising revenue and reducing gambling harm.
The direction of travel is already clear: online casino gaming is taxed more heavily, most online betting is due to face a higher rate next year, and traditional bingo has had its specific duty removed. The possible next step is a higher tax on physical gaming machines.
The Budget will tell us whether that final step is taken. The real test will be what happens afterwards: how much extra revenue is raised, whether businesses remain viable, and whether the changes achieve the Government's wider objectives without driving gambling activity into less well-regulated corners of the internet.